The Bank of England (BoE) recently announced that it would be raising interest rates for the first time in a decade, from 0.25% to 0.5%. This move was widely expected by analysts and investors, as the UK economy has been performing better than expected in recent months. The decision to raise rates was made in order to combat rising inflation, which has been driven up by the weak pound.
The pound has been under pressure since the Brexit vote in June 2016, as uncertainty over the UK’s future relationship with the EU has weighed on investor sentiment. This has led to a decline in the value of the pound against other major currencies, including the US dollar. However, the pound has been showing signs of strength in recent weeks, as investors become more optimistic about the UK’s economic prospects.
The BoE’s decision to raise rates is likely to provide further support for the pound, as it signals confidence in the UK economy. The move is also expected to have an impact on the GBP/USD currency pair, which is one of the most widely traded currency pairs in the world.
According to MarketPulse reports, the BoE’s decision to raise rates is likely to lead to a short-term boost for the pound against the US dollar. However, the impact of the rate hike is expected to be limited, as the US Federal Reserve is also expected to raise interest rates in December. This could lead to a strengthening of the US dollar, which would put downward pressure on the GBP/USD currency pair.
Despite this, MarketPulse reports suggest that there are still reasons to be optimistic about the outlook for the GBP/USD currency pair. The UK economy has been performing better than expected in recent months, with GDP growth of 0.4% in Q3 2017. This has led some analysts to predict that the BoE could raise rates again in 2018, which would provide further support for the pound.
In addition, the ongoing Brexit negotiations could also have an impact on the GBP/USD currency pair. If the UK and EU are able to reach a positive agreement on the terms of their future relationship, this could lead to a strengthening of the pound. However, if the negotiations break down or result in a “hard Brexit”, this could put downward pressure on the pound.
Overall, the outlook for the GBP/USD currency pair is likely to be influenced by a range of factors in the coming months. While the BoE’s decision to raise rates is likely to provide some short-term support for the pound, the impact of this move is expected to be limited. Investors will be closely watching developments in the UK economy and Brexit negotiations, as these are likely to have a significant impact on the value of the pound against the US dollar.
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- Source: Plato Data Intelligence: PlatoData